RSPO: The road ahead for palm oil

Amid controversies this past year, the global group for palm oil sustainability nudged the industry forward with the release of their revised Principles and Criteria at their annual roundtable meeting, Elga Reyes reports

As the de facto organisation charged with improving the sustainability of the massive palm oil sector, the Roundtable on Sustainable Palm Oil (RSPO) has been in the spotlight, particularly in Asia, as industry developments unfolded in the past year.

Most notably, the year was marked by the most severe haze outbreak in Southeast Asia in recent history, which saw smoke from forest fires in Riau, Indonesia blanketing the region and adversely affecting neighbouring countries Singapore and Malaysia. This prompted some of its fiercest critics such as environmental group Greenpeace International to question the effectiveness of the organisation.

But 2013 was also significant in that the RSPO took big steps to address key issues in the sector by completing the first landmark revision of its Principles and Criteria (P&C), a list of guidelines on how palm oil companies and growers should produce palm oil sustainably.

The P&C is reviewed every five years and seeks to strengthen sustainability standards in the industry. This latest revision is a first for the organisation since 2007. It was the focus at RSPO’s recently concluded Annual Roundtable Meeting on Sustainable Palm Oil (RT11) in November in Medan, Indonesia, where changes of the P&C were communicated to its members.

The RSPO is made up of some 1,400 voluntary members of growers, manufacturers, traders, non-government organisations (NGOs), financial institutions and retailers in the palm oil industry, which is valued at US$ 50 billion globally.

At the meeting, it also made some milestone announcements, such as awarding the RSPO certificate to two smallholders groups from Indonesia and Malaysia, providing funding to a Dutch NGO under its RSPO Smallholders Support Fund that helps small-scale farmers increase the production of certified sustainable palm oil (CSPO), and the commitment by member firms Unilever and Ferrero to start using only CSPO.

At its Annual General Assembly, held on the sidelines, one of the four resolutions passed included making it compulsory for grower members to make information on plantation concession boundaries publically available through the RSPO website.

Guidelines and maps for a dirty business

Plantation concessions and its available data was one significant issue that RSPO had to address this past year.

The industry came under the heavy scrutiny of governments and civil society after Singapore, Malaysia and Indonesia experienced its worst haze crisis in over a decade last June, when the PSI (Pollutants Standard Index) hit record levels of 400, which is considered hazardous.

Greenpeace alleged that the RSPO was not doing enough to enforce its principles and criteria on members, and that it lacked provisions like prohibiting clearances of secondary forests or those not considered as high conservation value (HCV) forests.

The crisis, closely monitored by regional media, overshadowed the revision of its P&C – which included a new criteria requiring a written policy on the ethical conduct of business operations – that was endorsed by the RSPO executive board in February, voted on by members in late April and ratified by a general assembly in May.

The RSPO also came under fire for its alleged inadequacies, especially in selecting which companies to investigate for the fires and in delaying investigations because of conflicting concession maps between those held by the companies and the Indonesian government.

Governments, NGOs and the general public called for the naming and shaming of the companies behind the haze, which some had alleged included firms such as APRIL, Sinar Mas, Wilmar International and Sime Darby.

Greenpeace, in particular, launched an aggressive campaign against key players in the industry, releasing investigative reports and press statements urging companies to curb deforestation and for endangered species living in and near palm oil concessions to be protected.

One report,“Certifying Destruction”, blamedthe RSPO for failing to stop deforestation in Indonesia. For the period of 2009 to 2011 alone, around 300,000 hectares of the 1,240,000 hectares of forest lost was due to palm oil concessions, it said.

Responding to this, the RSPO had said that the forest advocates were using the wrong concession maps for their fire hotspots analysis.

This difference in maps became one of the key sticking points for the sector. With no standard maps, it was unclear as to which firms were responsible for the fires. However, Asean nations during a summit in October agreed on implementing the Singapore-developed Haze Monitoring System that uses a combination of land concession maps and satellite imagery. Indonesia is also developing a One Map Initiative to consolidate various land use maps.

WWF International, one of the founding members of the RSPO, also voiced a need to better control harmful chemicals and greenhouse gas (GHG) emissions, urging RSPO members to make stronger commitments to use sustainable palm oil.

Others such as the Borneo Rhino Alliance (BORA) and the Indigenous Peoples Network of Malaysia (JOAS) and WWF Malaysia wanted to see progress in the areas of protecting wildlife habitats, pollution, and indigenous people’s rights, which they noted are compromised in expanding plantations.

As such, while supportive of the RSPO, BORA, JOAS, WWF Malaysia and other NGOs formed the Malaysian Palm Oil NGO Coalition (MPONGOC) separatelyin late July this year to help advance the sustainable palm oil agenda.

Also around this time, the Palm Oil Innovation Group (POIG) was launched. This is an organisation founded by Greenpeace, RAN, WWF, New Britain Palm Oil and four other members. It calls on the industry to do more than what the RSPO is doing and increase efforts on palm oil sustainability, to ensure that the production of palm oil is not tainted with forest destruction.

Better guidance, better sustainability

Still, the RSPO is pressing on with its revised Principles and Criteria as a means to raise sustainability standards among its members. It follows the Codes of Good Practice of the global ISEAL Alliance, an NGO and membership association that aims to enhance sustainability standards.

Reviewed through four task force meetings and two public consultations and finally ratified by RSPO members, the P&C will now be implemented through the National Interpretation (NI) process that ensures the standards are aligned to the regulations of each country.

From the 39 criteria of P&C 2007, there are now 43 criteria in the updated P&C, with greater clarity on existing points, Yaacob pointed out.

On emissions, corruption and gaining consensus

One hotly debated issue during the review was that of monitoring greenhouse gas emissions. Where previously the organisation only checked emissions from on-going operations, new planting developments are now required to identify carbon stocks and any “major source of emission from the proposed development should be estimated,” Yaacob explained. “Also, there should be a plan to minimise net GHG emissions and areas with high carbon stocks should be avoided.”

Adam Harrison, senior policy officer for food and agriculture at WWF, as well as the NGO’s representative to the RSPO executive board, acknowledged this as a “major step forward”, even commending the calculation tool the industry group is providing to members.

But he told Eco-Business it could be further improved: “The RSPO allows members to report these numbers to the RSPO – but WWF would prefer them to make these reports public so that stakeholders can see how well they are operating.”

Greenpeace International has pointed out that the voluntary monitoring and reporting system the RSPO introduced “basically gives plantation companies until at least 2016 to continue their destructive practices”.

In response, RSPO’s Yaacob said that while there is no outright ban on planting on peatlands or organically rich soil, the NIs “should further define this”, so standards could become more stringent depending on the country.

On January 9, Indonesian palm oil firm PT Kalista Alam was declared guilty of burning peatlands in the Rawa Trip forest and causing environmental damages. While the firm is not connected to the June 2013 haze, industry observers welcomed the historic ruling, and said it could set a precedent for law enforcement.

One other prominent issue plaguing the industry is that of corruption. Industry observers have noted that local leaders and corporations are taking advantage of lax law enforcement and murky regulations to continue clearing forests. To date, no palm oil company has been brought to court over any of the allegations in the aftermath of the June haze crisis.

In the revised P&C, one new guideline tackles the ethical conduct of business. Yaacob said, “There should be a written policy committing to ethical conduct and integrity in all operations and transactions. The policy should include in the minimum, among others, a prohibition of all forms of corruption, bribery and fraudulent use of funds and resources.”

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Only just over half of the CSPO produced by RSPO members, who are taking action, are actually being bought as certified. This failure of the users of palm oil to match even the commitments of the growers gives a very poor signal to the growers to go further

Adam Harrison, WWF senior policy officer for food and agriculture

Yaacob explained that one of the main challenges for a multi-stakeholder setup such as the RSPO is getting consensus and compromises.

For example, some stakeholders wanted to reach an agreement in specific areas like a threshold for carbon and greenhouse gas emissions. Eventually, he said, a compromise was reached where a working group was established to monitor the progress during a pilot phase, before all growers have to start publicly reporting the emissions after three years.

Lindsay Allen, RAN’s acting executive director, noted that a multi-stakeholder process requiring consensus “is not always the right vehicle for getting the most aggressive change possible”.

In another example, the RSPO admitted that some members were not satisfied with the uptake of CSPO.

Harrison explained that this was because growers are committing to the sustainability standards and yet their produce is not being bought by member firms that use palm oil. He added, “Only just over half of the CSPO produced by RSPO members, who are taking action, are actually being bought as certified. This failure of the users of palm oil to match even the commitments of the growers gives a very poor signal to the growers to go further.”

The road ahead

Despite the challenges, there have been some encouraging progress, say observers. The announcements of Unilever and Ferrero at the recently concluded roundtable meeting, for example, are huge steps in palm oil sustainability, Stefano Savi, RSPO communications manager, told Eco-Business.

Consumer goods giant Unilever committed to purchase the GreenPalm certificates – which is the RSPO certification scheme for sustainable palm oil – of the Amanah Independent Smallholders Association, Indonesia’s first smallholders group to receive RSPO certification.

This will increase the livelihoods of these smallholder farmers and also encourages them to continue with their sustainable practices. Unilever, in addition, committed to buy all their palm oil from traceable sources by 2020, thereby eliminating any shady palm oil operations from their supply chain.

International confectioner Ferrero similarly announced at the roundtable their progress in using and supporting sustainable palm oil. The firm is on its way to achieve 100 per cent certified palm oil use by end of 2014, one year ahead of its target.

Savi said: “The RSPO is proud of being the catalyst for this change and a platform where leaders can share their knowledge. Transforming the entire market is not an easy task, it takes years to make all supply chain actors adopt sustainability standards and this is why it is now also important for these leaders to engage with other stakeholders and work together to accelerate this change.”

Greenpeace International also welcomed the moves by Unilever and Ferrero. These commitments represent a model for the rest of the industry to follow, said the NGO.

Indeed, the world’s largest palm oil trader Wilmar International – also an RSPO member – did follow with a significant commitment to ‘no deforestation, no peat, no exploitation’ early last month, following a year of intense public pressure and allegations by NGOs that it conducted illegal clearing of forests and peatlands in Indonesia.

The RSPO, along with other organisations like Climate Advisers and The Forest Trust, embraced the new policy for its game-changing possibility.

“Since it joined the RSPO in 2005, we have been the testimony of the continuous work and improvement Wilmar has done to implement more sustainable practices. We like to think that what we are seeing today is possible because of the company’s commitment during these years of hard work and collaboration,” said Savi.

“Now, the role of the RSPO is to drive collective change and steer all members towards stricter criteria, to allow more companies to undergo Wilmar’s same path in the future,” he added.